If you own a car, you probably have heard of major exclusions when purchasing your car insurance policy. But have you ever wondered what do they actually mean and how do they affect you as a policyholder? Let us share with you the basics of major exclusions to help you understand your car policy better. Read on to find out more details below:
What are major exclusions?
Major exclusions in car insurance refer to specific situations where your insurance company will not cover the repair, replacement, or liability costs arising from an accident or damage to your vehicle.
These exclusions are the scenarios where the insurance provider will not provide coverage or compensation for damages or losses related to your vehicle. Interestingly enough, these exclusions apply to all policies including comprehensive car insurance plans.
Categories of major exclusions
Major exclusions can be divided into four types — driver-related exclusions, vehicle-related exclusions, event-related exclusions and geographical exclusions.
Below is a list of events that are normally included under each of these categories of exclusions.
Driver-related exclusions
- Driving under the influence (DUI) – Accidents caused by drivers under the influence of alcohol, drugs, or certain medications are typically excluded.
- Unlicensed or disqualified drivers – Damage caused by someone driving your car without a valid license or while disqualified is not covered.
- Negligent driving – Reckless or intentional driving that contributes to an accident may not be covered.
Vehicle-related exclusions
- Normal wear and tear – Gradual deterioration of your car due to everyday use is not covered.
- Pre-existing damage – Existing damage to your car before the policy starts is not covered.
- Unroadworthy vehicles – Accidents caused by a car in poor condition that wouldn’t pass a safety inspection are excluded.
Event-related exclusions
- Acts of nature – Damage caused by floods, earthquakes, hurricanes, or other natural disasters is often excluded unless you purchase additional coverage.
- Criminal activity – Damage caused during the commission of a crime is not covered.
- War and terrorism – Losses arising from war, terrorism, or civil unrest are typically excluded.
Geographical exclusions
- Driving outside the permitted area – Restriction on coverage to specific countries or regions.
- Import/export/e-hailing – Using your car for commercial purposes like import/export may not be covered.
What are some common examples?
In Malaysia, most insurers list the following incidents as major exclusions in the policy wording document. You can also find one or more of these items listed in the FAQ section of the product disclosure sheet.
- Policyholder’s death or bodily injury due to a motor accident
- Policyholder’s liability against claims from passengers in your vehicle
- Loss, damage or liability arising from an act of nature i.e. flood, storm or landslide (without special perils coverage)
- If the vehicle is used for hire & reward including a private hire car
- Consequential loss, depreciation, wear and tear, mechanical or electronic breakdowns
Since major exclusions are so crucial to any policy, understanding them is essential to help you manage your risks and expectations. Therefore, always read your policy document carefully and understand what’s covered and excluded to avoid surprises later. When in doubt, just contact your insurance provider for clarification.
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